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EXHIBIT 1.01
SALEM COMMUNICATIONS HOLDING CORPORATION
$150,000,000
9% SENIOR SUBORDINATED NOTES DUE 2011
PURCHASE AGREEMENT
June 20, 2001
DEUTSCHE BANC ALEX. BROWN INC.
J.P. MORGAN SECURITIES INC.
BEAR, STEARNS & CO. INC.
BNY CAPITAL MARKETS, INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
FLEET SECURITIES, INC.
JEFFERIES & COMPANY, INC.
c/o Deutsche Banc Alex. Brown Inc.
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen:
Salem Communications Holding Corporation, a Delaware corporation (the
"Company"), and each of the Guarantors (as defined below) hereby confirm their
agreement with you (the "Initial Purchasers"), as set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Initial Purchasers
$150,000,000 aggregate principal amount of its 9% Senior Subordinated Notes due
2011, (the "Notes"). The Notes are to be issued under an indenture (the
"Indenture") to be dated as of June 25, 2001 by and between the Company and The
Bank of New York, as Trustee (the "Trustee"). The Notes will be guaranteed on a
senior subordinated basis (the "Guarantees" and, together with the Notes, the
"Securities"), jointly and severally, by Salem Communications Corporation, a
Delaware corporation ("Parent"), and all of Parent's subsidiaries (other than
the Company) (each a "Guarantor" and collectively, the "Guarantors").
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Act"), in reliance on exemptions therefrom.
In connection with the sale of the Securities, the Company has
prepared a preliminary offering memorandum dated June 13, 2001(the "Preliminary
Memorandum"), and a final offering memorandum dated June 20, 2001 (the "Final
Memorandum"; the Preliminary Memorandum and the Final Memorandum each herein
being referred to as a "Memorandum") setting forth or including a description of
the
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terms of the Securities, the terms of the offering of the Securities, a
description of the Company and the Guarantors and any material developments
relating to the Company or the Guarantors occurring after the date of the most
recent historical financial statements included therein.
The Initial Purchasers and their direct and indirect transferees will
be entitled to the benefits of the Registration Rights Agreement, substantially
in the form attached hereto as Exhibit A (the "Registration Rights Agreement"),
pursuant to which the Company and the Guarantors have agreed, among other
things, to file a registration statement (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") registering the Notes or
the Exchange Notes (as defined in the Registration Rights Agreement) under the
Act.
2. Representations and Warranties. The Company and the Guarantors,
jointly and severally, represent and warrant to and agree with each of the
Initial Purchasers that:
(a) Neither the Preliminary Memorandum as of the date thereof nor the
Final Memorandum nor any amendment or supplement thereto as of the date
thereof and at all times subsequent thereto up to the Closing Date (as
defined in Section 3 below) contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and
warranties set forth in this Section 2(a) do not apply to statements or
omissions made in reliance upon and in conformity with information relating
to either of the Initial Purchasers furnished to the Company in writing by
the Initial Purchasers expressly for use in the Preliminary Memorandum, the
Final Memorandum or any amendment or supplement thereto.
(b) As of the Closing Date, the Company will have the authorized,
issued and outstanding capitalization set forth in the Final Memorandum;
all of the subsidiaries of the Company (collectively, the "Company
Subsidiaries") and of Parent (other than the Company and the Company
Subsidiaries) (collectively, the "Parent Subsidiaries" and, together with
the Company Subsidiaries, the "Subsidiaries") are listed in Schedule 2
attached hereto; all of the outstanding shares of capital stock of Parent,
the Company and the Subsidiaries have been, and as of the Closing Date will
be, duly authorized and validly issued, are fully paid and nonassessable
and were not issued in violation of any preemptive or similar rights; all
of the outstanding shares of capital stock (x) of the Company and of each
of the Subsidiaries are owned, directly or indirectly, by Parent and (y) of
the Company Subsidiaries are owned, directly or indirectly, by the Company,
in each case, except as set forth in the Memorandum, free and clear of all
liens, encumbrances, equities and claims or restrictions on transferability
(other than those imposed by the Act and the securities or "Blue Sky" laws
of certain jurisdictions) or voting; except as set forth in the Memorandum,
there are no (i) options, warrants or other rights to purchase, (ii)
agreements or other obligations to issue or (iii) other rights to convert
any obligation into, or exchange any securities for, shares of capital
stock of or ownership interests in Parent, the
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Company or any of the Subsidiaries outstanding. Except for the Company and
the Subsidiaries or as disclosed in the Final Memorandum, Parent does not
own, directly or indirectly, any shares of capital stock or any other
equity or long-term debt securities or have any equity interest in any
firm, partnership, joint venture or other entity.
(c) Each of Parent, the Company and the Subsidiaries is duly
incorporated, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation and has all requisite corporate
power and authority to own its properties and conduct its business as now
conducted and as described in the Final Memorandum; each of Parent, the
Company and the Subsidiaries is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions where the ownership
or leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on the
general affairs, management, business, condition (financial or otherwise),
prospects or results of operations of the Company and the Company
Subsidiaries, taken as a whole (any such event, a "Material Adverse
Effect").
(d) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Notes, the
Exchange Notes and the Private Exchange Notes (as defined in the
Registration Rights Agreement). The Notes, when issued, will be in the form
contemplated by the Indenture. The Notes, the Exchange Notes and the
Private Exchange Notes have each been duly and validly authorized by the
Company and, when executed by the Company and authenticated by the Trustee
in accordance with the provisions of the Indenture and, in the case of the
Notes, when delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, will constitute valid and
legally binding obligations of the Company, entitled to the benefits of the
Indenture, and enforceable against the Company in accordance with their
terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally, and
(ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought.
(e) Each Guarantor has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under its Guarantee.
The Guarantees, when issued, will be in the form contemplated by the
Indenture. Each Guarantee has been duly and validly authorized by and, when
executed by the relevant Guarantor in accordance with the provisions of the
Indenture, will constitute valid and legally binding obligations of such
Guarantor, entitled to the benefits of the Indenture, and enforceable
against such Guarantor in accordance with its terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and (ii) general
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principles of equity and the discretion of the court before which any
proceeding therefor may be brought.
(f) Each of the Company and the Guarantors has all requisite corporate
power and authority to execute, deliver and perform its obligations under
the Indenture. The Indenture meets the requirements for qualification under
the Trust Indenture Act of 1939, as amended (the "TIA"). The Indenture has
been duly and validly authorized by the Company and each Guarantor and,
when executed and delivered by the Company (assuming the due authorization,
execution and delivery by the Trustee), will constitute a valid and legally
binding agreement of the Company, enforceable against the Company in
accordance with its terms, and, when executed and delivered by any
Guarantor (assuming the due authorization, execution and delivery by the
Trustee), will constitute a valid and legally binding agreement of such
Guarantor, enforceable against such Guarantor in accordance with its terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought.
(g) Each of the Company and the Guarantors has all requisite corporate
power and authority to execute, deliver and perform its obligations under
the Registration Rights Agreement. The Registration Rights Agreement has
been duly and validly authorized by the Company and each Guarantor and,
when executed and delivered by the Company, will constitute a valid and
legally binding agreement of the Company, enforceable against the Company
in accordance with its terms and, when executed and delivered by any
Guarantor, will constitute a valid and legally binding agreement of such
Guarantor, enforceable against such Guarantor in accordance with its terms,
except that (A) the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought and (B) any rights to indemnity or
contribution thereunder may be limited by federal and state securities laws
and public policy considerations.
(h) Each of the Company and the Guarantors has all requisite corporate
power and authority to execute, deliver and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. This
Agreement and the consummation by the Company and each Guarantor of the
transactions contemplated hereby have been duly and validly authorized by
the Company and each Guarantor. This Agreement has been duly executed and
delivered by the Company and each Guarantor.
(i) No consent, approval, authorization or order of any court or
governmental agency or body, or third party is required for the issuance
and sale by the Company of the Notes or by the Guarantors of the
Guarantees, to the Initial Purchasers or the consummation by the Company or
the Guarantors of the other
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transactions contemplated hereby, except such as have been obtained and
such as may be required under state securities or "Blue Sky" laws in
connection with the purchase and resale of the Securities by the Initial
Purchasers or under federal or state securities laws with respect to the
Company and each Guarantor under the Registration Rights Agreement. None of
the Company or the Guarantors is (i) in violation of its certificate of
incorporation or bylaws (or similar organizational document), (ii) in
breach or violation of any statute, judgment, decree, order, rule or
regulation applicable to any of them or any of their respective properties
or assets, except for any such breach or violation which would not,
individually or in the aggregate, have a Material Adverse Effect, or (iii)
in breach of or default under (nor has any event occurred which, with
notice or passage of time or both, would constitute a default under) or in
violation of any of the terms or provisions of any indenture, mortgage,
deed of trust, loan agreement, note, lease, license, franchise agreement,
permit, certificate, contract or other agreement or instrument to which any
of them is a party or to which any of them or their respective properties
or assets is subject (collectively, "Contracts"), except for any such
breach, default, violation or event which would not, individually or in the
aggregate, have a Material Adverse Effect.
(j) The execution, delivery and performance by each of the Company and
the Guarantors of this Agreement, the Indenture and the Registration Rights
Agreement and the consummation by each of the Company and the Guarantors of
the transactions contemplated hereby and thereby (including, without
limitation, the issuance and sale of the Securities to the Initial
Purchasers) will not conflict with or constitute or result in a breach of
or a default under (or an event which with notice or passage of time or
both would constitute a default under) or violation of any of (i) the terms
or provisions of any Contract, except for any such conflict, breach,
violation, default or event which would not, individually or in the
aggregate, have a Material Adverse Effect, (ii) the certificate of
incorporation or bylaws (or similar organizational document) of the Company
or any of the Guarantors, or (iii) (assuming compliance with all applicable
state securities or "Blue Sky" laws and assuming the accuracy of the
representations and warranties, and the performance of the covenants, of
the Initial Purchasers in Section 8 hereof) any statute, judgment, decree,
order, rule or regulation applicable to the Company or any of the
Guarantors or any of their respective properties or assets, except for any
such conflict, breach or violation which would not, individually or in the
aggregate, have a Material Adverse Effect.
(k) The audited consolidated financial statements of Parent and its
subsidiaries included in the Final Memorandum present fairly in all
material respects the financial position, results of operations and cash
flows of Parent and its subsidiaries at the dates and for the periods to
which they relate and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis, except as
otherwise stated therein. The summary and selected financial and
statistical data in the Final Memorandum present fairly in all material
respects the information shown therein and have been prepared and compiled
on a basis consistent with the audited financial statements included in the
Final Memorandum, except as otherwise stated therein. Ernst & Young LLP
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(the "Independent Accountants") is an independent public accounting firm
with respect to Parent and its subsidiaries within the meaning of the Act
and the rules and regulations promulgated thereunder.
(l) The pro forma financial statements and data included in the Final
Memorandum (i) comply as to form in all material respects with the
applicable requirements of Regulation S-X promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (ii) have been
prepared in all material respects in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements, and (iii)
have been properly computed on the bases described therein; the assumptions
used in the preparation of the pro forma financial statements and data
included in the Final Memorandum are reasonable and the adjustments used
therein are appropriate to give effect to the transactions or circumstances
referred to therein.
(m) There is not pending or, to the knowledge of the Company or any
Guarantor, threatened any action, suit, proceeding, inquiry or
investigation to which the Company or any of the Guarantors is a party, or
to which the property or assets of the Company or any of the Guarantors is
subject, before or brought by any court, arbitrator or governmental agency
or body, including, but not limited to, the Federal Communications
Commission (the "FCC"), which, if determined adversely to the Company or
any of the Guarantors, would, individually or in the aggregate, have a
Material Adverse Effect or which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of the
Securities to be sold hereunder or the consummation of the other
transactions described in the Final Memorandum.
(n) Each of the Company and the Guarantors possesses all licenses,
permits, certificates, consents, orders, approvals and other authorizations
from, and has made all declarations and filings with, all federal, state,
local and other governmental authorities (including, but not limited to,
the FCC), all self-regulatory organizations and all courts and other
tribunals, presently required or necessary to own or lease, as the case may
be, and to operate its respective properties and to carry on its respective
businesses as now conducted as set forth in the Final Memorandum
("Permits"), except where the failure to obtain such Permits would not,
individually or in the aggregate, have a Material Adverse Effect; each of
the Company and the Guarantors has fulfilled and performed all of its
obligations with respect to such Permits and no event has occurred which
allows, or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment of the
rights of the holder of any such Permit, except where the failure to
fulfill or perform such obligations or the occurrence of any such event
would not, individually and in the aggregate, have a Material Adverse
Effect; and none of the Company or the Guarantors has received any notice
of any proceeding relating to revocation or modification of any such
Permit, except as described in the Final Memorandum and except where such
revocation or modification would not, individually or in the aggregate,
have a Material Adverse Effect.
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(o) Since the date of the most recent financial statements appearing
in the Final Memorandum, except as described therein, (i) none of the
Company or the Guarantors has incurred any liabilities or obligations,
direct or contingent, or entered into or agreed to enter into any
transactions or contracts (written or oral) not in the ordinary course of
business which liabilities, obligations, transactions or contracts would,
individually or in the aggregate, be material to the general affairs,
management, business, condition (financial or otherwise), prospects or
results of operations of the Company and the Company Subsidiaries, taken as
a whole, (ii) none of the Company or the Guarantors has purchased any of
its outstanding capital stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock (other than with
respect to the Dividend as described in the Final Memorandum) and (iii)
there shall not have been any material change in the capital stock or
long-term indebtedness of the Company or the Guarantors.
(p) Each of the Company and the Guarantors has filed all necessary
federal, state and foreign income and franchise tax returns, except where
the failure to so file such returns would not, individually or in the
aggregate, have a Material Adverse Effect, and has paid all taxes shown as
due thereon; and other than tax deficiencies which the Company or any
Guarantor is contesting in good faith and for which the Company or such
Guarantor has provided adequate reserves, there is no tax deficiency that
has been asserted against the Company or any of the Guarantors that would
have, individually or in the aggregate, a Material Adverse Effect.
(q) The statistical and market-related data included in the Final
Memorandum are based on or derived from sources which the Company and the
Guarantors believe to be reliable and accurate.
(r) None of the Company, the Guarantors or any agent acting on their
behalf has taken or will take any action that might cause this Agreement or
the sale of the Securities to violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System, in each case as in effect, or as
the same may hereafter be in effect, on the Closing Date.
(s) Each of the Company and the Guarantors has good and marketable
title to all real property and good title to all personal property
described in the Final Memorandum as being owned by it and good and
marketable title to a leasehold estate in the real and personal property
described in the Final Memorandum as being leased by it free and clear of
all liens, charges, encumbrances or restrictions, except as described in
the Final Memorandum or to the extent the failure to have such title or the
existence of such liens, charges, encumbrances or restrictions would not,
individually or in the aggregate, have a Material Adverse Effect. All
leases, contracts and agreements to which the Company or any of the
Guarantors is a party or by which any of them is bound are valid and
enforceable against the Company or such Guarantor, and are valid and
enforceable against the other party or parties thereto and are in full
force and effect with only such exceptions as would not, individually or in
the aggregate,
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have a Material Adverse Effect. The Company and the Guarantors own or
possess adequate licenses or other rights to use all patents, trademarks,
service marks, trade names, copyrights and know-how necessary to conduct
the businesses now operated by them as described in the Final Memorandum,
and none of the Company or any Guarantor has received any notice of
infringement of or conflict with (or knows of any such infringement of or
conflict with) asserted rights of others with respect to any patents,
trademarks, service marks, trade names, copyrights or know-how which, if
such assertion of infringement or conflict were sustained, would have a
Material Adverse Effect.
(t) There are no legal or governmental proceedings involving or
affecting the Company or any Guarantor or any of their respective
properties or assets which would be required to be described in a
prospectus pursuant to the Act that are not described in the Final
Memorandum, nor are there any material contracts or other documents which
would be required to be described in a prospectus pursuant to the Act that
are not described in the Final Memorandum.
(u) Except as would not, individually or in the aggregate, have a
Material Adverse Effect (A) each of the Company and the Guarantors is in
compliance with and not subject to liability under applicable Environmental
Laws (as defined below), (B) each of the Company and the Guarantors has
made all filings and provided all notices required under any applicable
Environmental Law, and has and is in compliance with all Permits required
under any applicable Environmental Laws and each of them is in full force
and effect, (C) there is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter or request for information pending or, to the
knowledge of the Company or any of the Guarantors, threatened against the
Company or any of the Guarantors under any Environmental Law, (D) no lien,
charge, encumbrance or restriction has been recorded under any
Environmental Law with respect to any assets, facility or property owned,
operated, leased or controlled by the Company or any of the Guarantors, (E)
none of the Company or the Guarantors has received notice that it has been
identified as a potentially responsible party under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA") or any comparable state law, and (F) no property or facility of
the Company or any of the Guarantors is (i) listed or proposed for listing
on the National Priorities List under CERCLA or is (ii) listed in the
Comprehensive Environmental Response, Compensation, Liability Information
System List promulgated pursuant to CERCLA, or on any comparable list
maintained by any state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the common
law and all applicable federal, state and local laws or regulations, codes,
orders, decrees, judgments or injunctions issued, promulgated, approved or
entered thereunder, relating to pollution or protection of public or
employee health and safety or the environment, including, without
limitation, laws relating to (i) emissions, discharges, releases or
threatened releases of hazardous materials into the environment (including,
without limitation, ambient air, surface water,
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ground water, land surface or subsurface strata), (ii) the manufacture,
processing, distribution, use, generation, treatment, storage, disposal,
transport or handling of hazardous materials, and (iii) underground and
above ground storage tanks and related piping, and emissions, discharges,
releases or threatened releases therefrom.
(v) There is no strike, labor dispute, slowdown or work stoppage with
the employees of the Company or any of the Guarantors which is pending or,
to the knowledge of the Company or any of the Guarantors, threatened that
would, individually or in the aggregate, result in a Material Adverse
Effect.
(w) Each of the Company and the Guarantors carries insurance in such
amounts and covering such risks as is adequate for the conduct of its
business and the value of its properties in accordance with customary
practice in the radio broadcasting industry.
(x) None of the Company or the Guarantors has any liability for any
prohibited transaction or funding deficiency or any complete or partial
withdrawal liability with respect to any pension, profit sharing or other
plan which is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), to which the Company or any of the Guarantors
makes or ever has made a contribution and in which any employee of the
Company or of any Guarantor is or has ever been a participant. With respect
to such plans, each of the Company and the Guarantors is in compliance in
all material respects with all applicable provisions of ERISA.
(y) Each of the Company and the Guarantors (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls
which provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded
as necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is
permitted only in accordance with management's authorization and (D) the
reported accountability for its assets is compared with existing assets at
reasonable intervals.
(z) None of the Company or the Guarantors is an "investment company"
or "promoter" or "principal underwriter" for an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder.
(aa) The Notes, the Guarantees, the Indenture and the Registration
Rights Agreement will conform in all material respects to the descriptions
thereof in the Final Memorandum.
(bb) No holder of securities of the Company or any Guarantor will be
entitled to have such securities registered under the registration
statements required to be filed by the Company and the Guarantors pursuant
to the Registration Rights Agreement other than as expressly permitted
thereby.
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(cc) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable
value of the assets of each of the Company and the Guarantors (each on a
consolidated basis) will exceed the sum of its stated liabilities and
identified contingent liabilities; none of the Company or the Guarantors
(each on a consolidated basis) is, nor will any of the Company or the
Guarantors (each on a consolidated basis) be, after giving effect to the
execution, delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby, (a) left with unreasonably small
capital with which to carry on its business as it is proposed to be
conducted, (b) unable to pay its debts (contingent or otherwise) as they
mature or (c) otherwise insolvent.
(dd) None of the Company, the Guarantors or any of their respective
Affiliates (as defined in Rule 501(b) of Regulation D under the Act) has
directly, or through any agent, (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any "security" (as
defined in the Act) which is or could be integrated with the sale of the
Securities in a manner that would require the registration under the Act of
the Notes or the Guarantees or (ii) engaged in any form of general
solicitation or general advertising (as those terms are used in Regulation
D under the Act) in connection with the offering of the Securities or in
any manner involving a public offering within the meaning of Section 4(2)
of the Act. Assuming the accuracy of the representations and warranties of
the Initial Purchasers in Section 8 hereof, it is not necessary in
connection with the offer, sale and delivery of the Securities to the
Initial Purchasers in the manner contemplated by this Agreement to register
any of the Notes or the Guarantees under the Act or to qualify the
Indenture under the TIA.
(ee) No securities of the Company or any Guarantor are of the same
class (within the meaning of Rule 144A under the Act) as the Notes or the
Guarantees and listed on a national securities exchange registered under
Section 6 of the Exchange Act, or quoted in a U.S. automated inter-dealer
quotation system.
(ff) None of the Company or the Guarantors has taken, nor will any of
them take, directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or manipulation of
the price of the Securities.
(gg) None of the Company, the Guarantors, any of their respective
Affiliates or any person acting on its or their behalf (other than the
Initial Purchasers) has engaged in any directed selling efforts (as that
term is defined in Regulation S under the Act ("Regulation S")) with
respect to the Securities; the Company, the Guarantors and their respective
Affiliates and any person acting on its or their behalf (other than the
Initial Purchasers) have complied with the offering restrictions
requirement of Regulation S.
(hh) The Dividend (as defined in the Memorandum) has been duly and
validly consummated, and such consummation did not and will not result in a
violation of, or constitute a default under, the certificate of
incorporation or
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bylaws (or similar organizational documents) of the Company or any
Guarantor or any Contract.
Any certificate signed by any officer of the Company or any Guarantor
and delivered to any Initial Purchaser or to counsel for the Initial Purchasers
shall be deemed a joint and several representation and warranty by the Company
and each of the Guarantors to each Initial Purchaser as to the matters covered
thereby.
3. Purchase, Sale and Delivery of the Notes. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchasers, and the Initial Purchasers, acting
severally and not jointly, agree to purchase the Notes in the respective amounts
set forth on Schedule 1 hereto from the Company at 97.5% of their principal
amount. One or more certificates in definitive form for the Notes that the
Initial Purchasers have agreed to purchase hereunder, and in such denomination
or denominations and registered in such name or names as the Initial Purchasers
request upon notice to the Company at least 36 hours prior to the Closing Date,
shall be delivered by or on behalf of the Company to the Initial Purchasers,
against payment by or on behalf of the Initial Purchasers of the purchase price
therefor by wire transfer (same day funds), to such account or accounts as the
Company shall specify prior to the Closing Date, or by such means as the parties
hereto shall agree prior to the Closing Date. Such delivery of and payment for
the Notes shall be made at the offices of Debevoise & Plimpton, 875 Third
Avenue, New York, New York at 10:00 A.M., New York time, on June 25, 2001 or at
such other place, time or date as the Initial Purchasers, on the one hand, and
the Company, on the other hand, may agree upon, such time and date of delivery
against payment being herein referred to as the "Closing Date." The Company will
make such certificate or certificates for the Notes available for checking and
packaging by the Initial Purchasers at the offices of Deutsche Banc Alex. Brown
Inc. in New York, New York, or at such other place as Deutsche Banc Alex. Brown
Inc. may designate, at least 24 hours prior to the Closing Date.
4. Offering by the Initial Purchasers. The Initial Purchasers propose
to make an offering of the Securities at the price and upon the terms set forth
in the Final Memorandum, as soon as practicable after this Agreement is entered
into and as in the judgment of the Initial Purchasers is advisable.
5. Covenants of the Company. The Company and the Guarantors, jointly
and severally, covenant and agree with each of the Initial Purchasers that:
(a) The Company will not amend or supplement the Final Memorandum or
any amendment or supplement thereto of which the Initial Purchasers shall
not previously have been advised and furnished a copy for a reasonable
period of time prior to the proposed amendment or supplement and as to
which the Initial Purchasers shall not have given their consent (which
consent shall not be unreasonably withheld, conditioned or delayed). The
Company will promptly, upon the reasonable request of the Initial
Purchasers or counsel for the Initial Purchasers, make any amendments or
supplements to the Preliminary
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Memorandum or the Final Memorandum that may be necessary or advisable in
connection with the resale of the Securities by the Initial Purchasers.
(b) The Company and the Guarantors will cooperate with the Initial
Purchasers in arranging for the qualification of the Securities for
offering and sale under the securities or "Blue Sky" laws of such
jurisdictions as the Initial Purchasers may designate and will use their
best efforts to continue such qualifications in effect for as long as may
be necessary to complete the resale of the Securities; provided, however,
that in connection therewith, the Company and the Guarantors shall not be
required to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction or subject itself to
taxation in excess of a nominal dollar amount in any such jurisdiction
where it is not then so subject.
(c) If, at any time prior to the completion of the distribution by the
Initial Purchasers of the Notes or the Private Exchange Notes, any event
occurs or information becomes known as a result of which the Final
Memorandum as then amended or supplemented would include any untrue
statement of a material fact, or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if for any other reason it is necessary
at any time to amend or supplement the Final Memorandum to comply with
applicable law, the Company will promptly notify the Initial Purchasers
thereof and will prepare, at the expense of the Company, an amendment or
supplement to the Final Memorandum that corrects such statement or omission
or effects such compliance.
(d) The Company will, without charge, provide to the Initial
Purchasers and to counsel for the Initial Purchasers as many copies of the
Preliminary Memorandum and the Final Memorandum or any amendment or
supplement thereto as the Initial Purchasers may reasonably request.
(e) The Company will apply the net proceeds from the sale of the Notes
as set forth under "Use of Proceeds" in the Final Memorandum.
(f) For so long as any of the Notes remain outstanding, the Company
will furnish to the Initial Purchasers copies of all reports and other
communications (financial or otherwise) furnished by the Company to the
Trustee or to the holders of the Notes and, as soon as available, copies of
any reports or financial statements furnished to or filed by the Company or
any Guarantor with the Commission or any national securities exchange on
which any class of securities of the Company or any Guarantor may be
listed.
(g) Prior to the Closing Date, the Company will furnish to the Initial
Purchasers, as soon as they have been prepared, a copy of any unaudited
interim financial statements of the Company and Parent for any period
subsequent to the period covered by the most recent financial statements
appearing in the Final Memorandum.
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(h) None of the Company, any Guarantor or any of their respective
Affiliates will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any "security" (as defined in the Act) which could
be integrated with the sale of the Securities in a manner which would
require the registration under the Act of the Notes or the Guarantees.
(i) Neither the Company nor any Guarantor will engage in any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Act) in connection with the offering of the
Securities or in any manner involving a public offering within the meaning
of Section 4(2) of the Act.
(j) For so long as any of the Securities remain outstanding, the
Company will make available at its expense, upon request, to any holder of
such Securities and any prospective purchasers thereof the information
specified in Rule 144A(d)(4) under the Act, unless the Company is then
subject to Section 13 or 15(d) of the Exchange Act.
(k) The Company will use its best efforts to (i) permit the Notes to
be designated as PORTAL-eligible securities in accordance with the rules
and regulations adopted by the NASD relating to trading in the NASD's
PORTAL Market (the "PORTAL Market") and (ii) permit the Notes to be
eligible for clearance and settlement through The Depository Trust Company.
(l) In connection with Securities offered and sold in an off shore
transaction (as defined in Regulation S) none of the Company or any
Guarantor will (i) register any transfer of such Securities not made in
accordance with the provisions of Regulation S or (ii) except in accordance
with the provisions of Regulation S, if applicable, issue any such
Securities in the form of definitive securities.
(m) The Company will use all of the proceeds from the Settlement (as
defined in the Memorandum) to repay borrowings under the Company's credit
facility.
6. Expenses. The Company and the Guarantors, jointly and severally,
agree to pay all costs and expenses incident to the performance of its
obligations under this Agreement, whether or not the transactions contemplated
herein are consummated or this Agreement is terminated pursuant to Section 11
hereof, including all costs and expenses incident to (i) the printing, word
processing or other production of documents with respect to the transactions
contemplated hereby, including any costs of printing the Preliminary Memorandum
and the Final Memorandum and any amendment or supplement thereto, and any "Blue
Sky" memoranda, (ii) all arrangements relating to the delivery to the Initial
Purchasers of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants and any other experts or advisors
retained by the Company or any Guarantor, (iv) preparation (including printing),
issuance and delivery to the Initial Purchasers of the Securities, (v) the
qualification of the Securities under state securities and "Blue Sky" laws,
including filing fees and reasonable fees and disbursements of counsel for the
Initial Purchasers relating thereto, (vi) expenses in
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connection with the "roadshow" and any other meetings with prospective investors
in the Securities, excluding travel expenses on commercial airlines and lodging
expenses of representatives of the Initial Purchasers, it being understood that
the Company and the Guarantors shall pay all fees, costs and expenses relating
to aircraft of Atsinger Aviation LLC used in connection with the roadshow and
any such meetings, (vii) fees and expenses of the Trustee including reasonable
fees and expenses of counsel, (viii) all expenses and listing fees incurred in
connection with the application for quotation of the Notes on the PORTAL Market
and (ix) any fees charged by investment rating agencies for the rating of the
Notes. If the sale of the Securities provided for herein is not consummated
because any condition to the obligations of the Initial Purchasers set forth in
Section 7 hereof is not satisfied, because this Agreement is terminated or
because of any failure, refusal or inability on the part of the Company or any
Guarantor to perform all obligations and satisfy all conditions on their part to
be performed or satisfied hereunder (other than solely by reason of a default by
the Initial Purchasers of their obligations hereunder after all conditions
hereunder have been satisfied in accordance herewith), the Company agrees to
promptly reimburse the Initial Purchasers upon demand for all reasonable
out-of-pocket expenses (including reasonable fees, disbursements and charges of
Debevoise & Plimpton, counsel for the Initial Purchasers) that shall have been
incurred by the Initial Purchasers in connection with the proposed purchase and
sale of the Securities. It is understood that, except as provided in the
immediately preceding sentence and in Section 9, the Initial Purchasers will pay
all of their costs and expenses, including fees and disbursements of their
counsel, transfer taxes on resale of any of the Notes by them and any
advertising expenses connected with any offers they may make.
7. Conditions of the Initial Purchasers' Obligations. The obligation
of the Initial Purchasers to purchase and pay for the Securities shall, in their
sole discretion, be subject to the satisfaction or waiver of the following
conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchasers shall have received
the opinions, dated as of the Closing Date and addressed to the Initial
Purchasers, of (i) Jonathan Block, Esq., General Counsel of the Company and
the Guarantors, in substantially the form of Exhibit B-1 attached hereto,
(ii) Gibson, Dunn & Crutcher, LLP, counsel for the Company and the
Guarantors, in substantially the form of Exhibit B-2 attached hereto and
(iii) Fletcher, Heald & Hildreth, P.L.C., special communications counsel to
the Company and the Guarantors, in substantially the form of Exhibit B-3
attached hereto.
(b) On the Closing Date, the Initial Purchasers shall have received
the opinion, in form and substance satisfactory to the Initial Purchasers,
dated as of the Closing Date and addressed to the Initial Purchasers, of
Debevoise & Plimpton, counsel for the Initial Purchasers, with respect to
certain legal matters relating to this Agreement and such other related
matters as the Initial Purchasers may reasonably require. In rendering such
opinion, Debevoise & Plimpton shall have received and may rely upon such
certificates and other documents and information as it may reasonably
request to pass upon such matters.
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(c) The Initial Purchasers shall have received from the Independent
Accountants a comfort letter or letters dated the date hereof and the
Closing Date, in form and substance satisfactory to counsel for the Initial
Purchasers containing statements and information of the type ordinarily
included in accountants' comfort letters to underwriters with respect to
the financial statements and certain financial information contained in the
Final Memorandum.
(d) The representations and warranties of the Company and the
Guarantors contained in this Agreement shall be true and correct on and as
of the date hereof and on and as of the Closing Date as if made on and as
of the Closing Date; the statements of the Company's or any Guarantor's
officers made pursuant to any certificate delivered in accordance with the
provisions hereof shall be true and correct on and as of the date made and
on and as of the Closing Date; each of the Company and the Guarantors shall
have performed all covenants and agreements and satisfied all conditions on
its part to be performed or satisfied hereunder at or prior to the Closing
Date; and, except as described in the Final Memorandum (exclusive of any
amendment or supplement thereto after the date hereof), subsequent to the
date of the most recent financial statements in such Final Memorandum,
there shall have been no event or development, and no information shall
have become known, that, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect.
(e) The sale of the Securities hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(f) Subsequent to the date of the most recent financial statements in
the Final Memorandum (exclusive of any amendment or supplement thereto
after the date hereof), none of the Company or any of the Guarantors shall
have sustained any loss or interference with respect to its business or
properties from fire, flood, hurricane, accident or other calamity, whether
or not covered by insurance, or from any strike, labor dispute, slow down
or work stoppage or from any legal or governmental proceeding, order or
decree, which loss or interference, individually or in the aggregate, has
or would be reasonably likely to have a Material Adverse Effect.
(g) The Initial Purchasers shall have received a certificate of the
Company, dated the Closing Date, signed on behalf of each of the Company
and Parent by its Chairman of the Board, President or any Senior Vice
President and the Chief Financial Officer, to the effect that:
(i) The representations and warranties of the Company and each
Guarantor contained in this Agreement are true and correct on and as
of the date hereof and on and as of the Closing Date, and each of the
Company and the Guarantors has performed all covenants and agreements
and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date;
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(ii) At the Closing Date, since the date hereof or since the date
of the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), no event or development known to them has occurred, and no
information has become known, that, individually or in the aggregate,
has or would be reasonably likely to have a Material Adverse Effect;
and
(iii) To their knowledge, the sale of the Securities hereunder
has not been enjoined (temporarily or permanently).
(h) On the Closing Date, the Initial Purchasers shall have received
the Registration Rights Agreement executed by the Company and each
Guarantor and such agreement shall be in full force and effect at all times
from and after the Closing Date.
(i) The Initial Purchasers shall have received a certificate of the
Company, dated the Closing Date, signed on behalf of the Company by its
Chief Financial Officer, to the effect that the issuance and sale by the
Company of the Notes on the Closing Date complies with the Indenture, dated
September 25, 1997, among Salem Communications Corporation, the guarantors
party thereto and The Bank of New York as trustee, as amended (the
"Existing Indenture"), and the Fourth Amended and Restated Credit
Agreement, dated as of June 15, 2001, by and among the Company, The Bank of
New York, Bank of America, N.A., Fleet National Bank, Union Bank of
California N.A., The Bank of Nova Scotia and the Lenders party thereto, as
amended, setting forth in reasonable detail the calculations with respect
thereto, including, without limitation, Section 10.08 of the Existing
Indenture.
On or before the Closing Date, the Initial Purchasers and counsel for
the Initial Purchasers shall have received such further documents, opinions,
certificates, letters and schedules or instruments relating to the business,
corporate, legal and financial affairs of the Company and the Guarantors as they
shall have heretofore reasonably requested from the Company.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchasers and counsel for the Initial Purchasers. The Company shall
furnish to the Initial Purchasers such conformed copies of such documents,
opinions, certificates, letters, schedules and instruments in such quantities as
the Initial Purchasers shall reasonably request.
8. Offering of Securities; Restrictions on Transfer.
(a) Each Initial Purchaser, severally and not jointly, represents and
warrants that such Initial Purchaser is a QIB. Each of the Initial Purchasers
agrees with the Company (as to itself only) that (i) it has not and will not
solicit offers for, or offer or sell, the Securities by any form of general
solicitation or general advertising (as those
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terms are used in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Act or in violation of
laws of any state of the United States; and (ii) it has and will solicit offers
for the Securities only from, and will offer the Securities only to (A) in the
case of offers inside the United States, persons whom the Initial Purchasers
reasonably believe to be QIBs or, if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to the Initial Purchasers that each such
account is a QIB, to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A, and, in each case, in transactions under
Rule 144A and (B) in the case of offers outside the United States, to persons
other than U.S. persons ("non-U.S. purchasers," which term shall include dealers
or other professional fiduciaries in the United States acting on a discretionary
basis for non-U.S. beneficial owners (other than an estate or trust)); provided,
however, that, in the case of this clause (B), in purchasing such Securities
such persons are deemed to have represented and agreed as provided under the
caption "Notice to Investors" contained in the Final Memorandum (or, if the
Final Memorandum is not in existence, in the most recent Memorandum).
(b) Each of the Initial Purchasers represents and warrants (as to
itself only) with respect to offers and sales outside the United States that (i)
it has and will comply with all applicable laws and regulations in each
jurisdiction in which it acquires, offers, sells or delivers Securities or has
in its possession or distributes any Memorandum or any such other material, in
all cases at its own expense; (ii) the Securities have not been and will not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except in accordance with Regulation S under the Act or
pursuant to an exemption from the registration requirements of the Act; (iii) it
has offered the Securities and will offer and sell the Securities (A) as part of
its distribution at any time and (B) otherwise until 40 days after the later of
the commencement of the offering and the Closing Date, only in accordance with
Rule 903 of Regulation S and, accordingly, neither it nor any persons acting on
its behalf have engaged or will engage in any directed selling efforts (within
the meaning of Regulation S) with respect to the Securities, and any such
persons have complied and will comply with the offering restrictions requirement
of Regulation S and (iv) at or prior to confirmation of sales of the Notes, it
will have sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases Notes from it during the
restricted period (within the meaning of Regulation S) a confirmation or notice
to substantially the following effect:
"The Notes covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered and sold
within the United States or to, or for the account or benefit of, U.S. persons
(i) as part of their distribution at any time or (ii) otherwise until 40 days
after the later of the commencement of the offering and closing date, except in
either case in accordance with Regulation S (or Rule 144A if available) under
the Securities Act. Terms used above have the meaning given to them by
Regulation S."
Terms used in this Section 8 and not defined in this Agreement have
the meanings given to them in Regulation S.
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The Initial Purchasers also understand that the Company and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Sections 7(a) and 7(b) hereof, counsel to the Company and counsel to the Initial
Purchasers will rely upon the accuracy and truth of the foregoing
representations and agreements and each Initial Purchaser hereby consents to
such reliance.
9. Indemnification and Contribution.
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless each Initial Purchaser and each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act against any losses, claims, damages or
liabilities to which any Initial Purchaser or such controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as any such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon:
(i) any untrue statement or alleged untrue statement made by the
Company or any Guarantor in Section 2 hereof;
(ii) any untrue statement or alleged untrue statement of any material
fact contained in any Memorandum or any amendment or supplement thereto; or
(iii) the omission or alleged omission to state, in any Memorandum or
any amendment or supplement thereto, a material fact required to be stated
therein or necessary to make the statements therein not misleading,
and will reimburse, as incurred, the Initial Purchasers and each such
controlling person for any legal or other expenses reasonably incurred by the
Initial Purchasers or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage or liability or action; provided, however, that the
Company and the Guarantors will not be liable in any such case to the extent
that any such loss, claim, damage, or liability arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged omission
made in any Memorandum or any amendment or supplement thereto in reliance upon
and in conformity with written information concerning the Initial Purchasers
furnished to the Company by the Initial Purchasers through Deutsche Banc Alex.
Brown Inc. specifically for use therein; and provided further, however, that
with respect to any untrue statement or omission of a material fact made in any
Preliminary Memorandum, the indemnity agreement contained in this Section 9(a)
shall not inure to the benefit of any Initial Purchaser from whom the person
asserting any such loss, claim, damage or liability purchased the Securities
concerned in any initial resale of the Securities by the Initial Purchaser, to
the extent that any such loss, claim, damage or liability of such Initial
Purchaser occurs under the circumstance where it shall have been determined by a
court of competent jurisdiction by final and non-appealable judgment that (i)
the untrue statement or omission of a material fact contained in the Preliminary
Memorandum was corrected in the Final Memorandum, (ii) the Company had
previously furnished copies of the Final Memorandum to the Initial Purchasers
and (iii) such loss, claim, damage or liability results from the fact that there
was not sent or given to such person at or prior to
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the written confirmation of the sale of such Securities to such person, a copy
of the Final Memorandum. The indemnity provided for in this Section 9 will be
in addition to any liability that the Company or any Guarantor may otherwise
have to the indemnified parties. The Company and the Guarantors shall not be
liable under this Section 9 for any settlement of any claim or action effected
without its prior written consent, which shall not be unreasonably withheld.
(b) Each Initial Purchaser, severally and not jointly, agrees to
indemnify and hold harmless the Company and the Guarantors and their respective
directors and officers and each person, if any, who controls the Company and the
Guarantors within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities to which the
Company, such Guarantor or any such director, officer or controlling person may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any Memorandum or any amendment or supplement
thereto, or (ii) the omission or the alleged omission to state therein a
material fact required to be stated in any Memorandum or any amendment or
supplement thereto, or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information concerning such Initial
Purchaser, furnished to the Company by the Initial Purchasers through Deutsche
Banc Alex. Brown Inc. specifically for use therein; and subject to the
limitation set forth immediately preceding this clause, will reimburse, as
incurred, any legal or other expenses incurred by the Company, such Guarantor or
any such director, officer or controlling person in connection with
investigating or defending against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action in respect
thereof. The indemnity provided for in this Section 9 will be in addition to any
liability that the Initial Purchasers may otherwise have to the indemnified
parties. The Initial Purchasers shall not be liable under this Section 9 for any
settlement of any claim or action effected without their consent, which shall
not be unreasonably withheld. Neither the Company nor any Guarantor shall,
without the prior written consent of the Initial Purchasers, effect any
settlement or compromise of any pending or threatened proceeding in respect of
which any Initial Purchaser is or could have been a party, or indemnity could
have been sought hereunder by any Initial Purchaser, unless such settlement (A)
includes an unconditional written release of the Initial Purchasers, in form and
substance reasonably satisfactory to the Initial Purchasers, from all liability
on claims that are the subject matter of such proceeding and (B) does not
include any statement as to an admission of fault, culpability or failure to act
by or on behalf of any Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this Section
9 of notice of the commencement of any action for which such indemnified party
is entitled to indemnification under this Section 9, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9, notify the indemnifying party of the commencement thereof
in writing; but the omission to so notify the indemnifying party (i) will not
relieve it from any liability under paragraph (a) or (b) above unless and to the
extent such failure results in the forfeiture by the
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indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraphs (a) and
(b) above. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 9 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Initial Purchasers in the case
of paragraph (a) of this Section 9 or the Company and the Guarantors in the case
of paragraph (b) of this Section 9, representing the indemnified parties under
such paragraph (a) or paragraph (b), as the case may be, who are parties to such
action or actions) or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party. All fees and expenses reimbursed pursuant to this paragraph
(c) shall be reimbursed as they are incurred. After such notice from the
indemnifying party to such indemnified party, the indemnifying party will not be
liable for the costs and expenses of any settlement of such action effected by
such indemnified party without the prior written consent of the indemnifying
party (which consent shall not be unreasonably withheld), unless such
indemnified party waived in writing its rights under this Section 9, in which
case the indemnified party may effect such a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 9 is unavailable to, or insufficient to
hold harmless, an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and
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equitable contribution, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect (i)
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other from the offering of the Securities
or (ii) if the allocation provided by the foregoing clause (i) is not permitted
by applicable law, not only such relative benefits but also the relative fault
of the indemnifying party or parties on the one hand and the indemnified party
on the other in connection with the statements or omissions or alleged
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative benefits received by
the Company and the Guarantors on the one hand and any Initial Purchaser on the
other shall be deemed to be in the same proportion as the total proceeds from
the offering (before deducting expenses) received by the Company bear to the
total discounts and commissions received by such Initial Purchaser. The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or any Guarantor on the one hand, or such Initial
Purchaser on the other, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission or
alleged statement or omission, and any other equitable considerations
appropriate in the circumstances. The Company, the Guarantors and the Initial
Purchasers agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d).
Notwithstanding any other provision of this paragraph (d), no Initial Purchaser
shall be obligated to make contributions hereunder that in the aggregate exceed
the total discounts, commissions and other compensation received by such Initial
Purchaser under this Agreement, less the aggregate amount of any damages that
such Initial Purchaser has otherwise been required to pay by reason of the
untrue or alleged untrue statements or the omissions or alleged omissions to
state a material fact, and no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each person, if any, who
controls an Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Initial Purchasers, and each director of the Company or any Guarantor, each
officer of the Company or any Guarantor and each person, if any, who controls
the Company or any Guarantor within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, shall have the same rights to contribution as
the Company.
10. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, the
Guarantors, their respective officers and the Initial Purchasers set forth in
this Agreement or made by or on behalf of them pursuant to this Agreement shall
remain in full force and effect, regardless of (i) any investigation made by or
on behalf of the Company or any Guarantor, any of their respective officers or
directors, the Initial Purchasers or any controlling person referred to in
Section 9 hereof and (ii) delivery of and payment for the Securities. The
respective agreements, covenants, indemnities and other statements set
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forth in Sections 6, 9 and 15 hereof shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement.
11. Termination.
(a) This Agreement may be terminated in the sole discretion of the
Initial Purchasers by notice to the Company given prior to the Closing Date in
the event that the Company or any Guarantor shall have failed, refused or been
unable to perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder at or prior thereto or, if at or prior to the
Closing Date:
(i) any of the Company or the Guarantors shall have sustained any loss
or interference with respect to its businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any strike, labor dispute, slow down or work stoppage or
any legal or governmental proceeding, which loss or interference, in the
sole judgment of the Initial Purchasers, has had or has a Material Adverse
Effect, or there shall have been, in the sole judgment of the Initial
Purchasers, any event or development that, individually or in the
aggregate, has or could be reasonably likely to have a Material Adverse
Effect (including without limitation a change in control of the Company,
Parent or the Subsidiaries), except in each case as described in the Final
Memorandum (exclusive of any amendment or supplement thereto);
(ii) trading in securities of Parent or in securities generally on the
New York Stock Exchange, American Stock Exchange or the NASDAQ National
Market shall have been suspended or materially limited or minimum or
maximum prices shall have been established on any such exchange or market;
(iii) a banking moratorium shall have been declared by New York or
United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international calamity
or emergency, or (C) any material change in the financial markets of the
United States which, in the case of (A), (B) or (C) above and in the sole
judgment of the Initial Purchasers, makes it impracticable or inadvisable
to proceed with the offering or the delivery of the Securities as
contemplated by the Final Memorandum; or
(v) any securities of Parent or the Company shall have been downgraded
or placed on any "watch list" for possible downgrading by any nationally
recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 11 shall be
without liability of any party to any other party except as provided in Section
10 hereof.
12. Information Supplied by the Initial Purchasers. The statements set
forth in the last paragraph on the cover page and in the second and third
sentences of the
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third paragraph and in the sixth paragraph under the heading "Private Placement"
in the Preliminary Memorandum and the Final Memorandum (to the extent such
statements relate to the Initial Purchasers) constitute the only information
furnished by the Initial Purchasers to the Company and the Guarantors for the
purposes of Sections 2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing and, if
sent to the Initial Purchasers, shall be mailed or delivered to Deutsche Banc
Alex. Brown Inc., 130 Liberty Street, New York, New York 10006, Attention:
Corporate Finance Department; if sent to the Company or the Guarantors, shall be
mailed or delivered to the Company at 4880, Santa Rosa Road, Camarillo,
California, 93012 Attention: General Counsel, with a copy to Gibson, Dunn &
Crutcher LLP, 4 Park Plaza, Suite 1800, Irvine, California 92614, Attention:
Thomas D. Magill.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; and one business day
after being timely delivered to a next-day air courier.
14. Successors. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers, the Company, the Guarantors and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained; this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company and the Guarantors contained in Section 9 of this
Agreement shall also be for the benefit of any person or persons who control the
Initial Purchasers within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act and (ii) the indemnities of the Initial Purchasers contained in
Section 9 of this Agreement shall also be for the benefit of the directors of
the Company and the Guarantors, their respective officers and any person or
persons who control the Company and the Guarantors within the meaning of Section
15 of the Act or Section 20 of the Exchange Act. No purchaser of Securities from
the Initial Purchasers will be deemed a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY PROVISIONS
THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among the Company,
the Guarantors and the Initial Purchasers.
Very truly yours,
SALEM COMMUNICATIONS HOLDING CORPORATION
By: /s/ Jonathan L. Block
------------------------------------
Name: Jonathan L. Block
Title: Vice President, General Counsel
and Secretary
SALEM COMMUNICATIONS CORPORATION
By: /s/ Jonathan L. Block
------------------------------------
Name: Jonathan L. Block
Title: Vice President, General Counsel
and Secretary
-24-
25
ATEP RADIO, INC.
BISON MEDIA, INC.
CARON BROADCASTING, INC.
CCM COMMUNICATIONS, INC.
COMMON GROUND BROADCASTING, INC.
GOLDEN GATE BROADCASTING COMPANY INC.
INLAND RADIO, INC.
INSPIRATION MEDIA, INC.
INSPIRATION MEDIA OF PENNSYLVANIA, LP
INSPIRATION MEDIA OF TEXAS, LLC
KINGDOM DIRECT, INC.
NEW ENGLAND CONTINENTAL MEDIA, INC.
NEW INSPIRATION BROADCASTING COMPANY, INC.
OASIS RADIO, INC.
ONEPLACE, LLC
PENNSYLVANIA MEDIA ASSOCIATES, INC.
RADIO 1210, INC.
REACH SATELITE NETWORK, INC.
SALEM COMMUNICATIONS ACQUISITION CORPORATION
SALEM MEDIA CORPORATION
SALEM MEDIA OF COLORADO, INC.
SALEM MEDIA OF GEORGIA, INC.
SALEM MEDIA OF HAWAII, INC.
SALEM MEDIA OF ILLINOIS, LLC
SALEM MEDIA OF KENTUCKY, INC.
SALEM MEDIA OF NEW YORK, LLC
SALEM MEDIA OF OHIO, INC.
SALEM MEDIA OF OREGON, INC.
SALEM MEDIA OF PENNSYLVANIA, INC.
SALEM MEDIA OF TEXAS, INC.
SALEM MEDIA OF VIRGINIA, INC.
SALEM MUSIC NETWORK, INC.
SALEM RADIO NETWORK INCORPORATED
SALEM RADIO OPERATIONS, LLC
SALEM RADIO OPERATIONS - PENNSYLVANIA, INC.
SALEM RADIO PROPERTIES, INC.
SALEM RADIO REPRESENTATIVES, INC.
SCA LICENSE CORPORATION
SOUTH TEXAS BROADCASTING, INC.
SRN NEWS NETWORK, INC.
VISTA BROADCASTING, INC.
By: /s/ Jonathan L. Block
------------------------------------
Name: Jonathan L. Block
Title: Vice President and Secretary
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26
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
DEUTSCHE BANC ALEX. BROWN INC.
J.P. MORGAN SECURITIES INC.
BEAR, STEARNS & CO. INC.
BNY CAPITAL MARKETS, INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
FLEET SECURITIES, INC.
JEFFERIES & COMPANY, INC.
Acting on behalf of themselves and
the several Initial Purchasers named
in Schedule I hereto.
By: DEUTSCHE BANC ALEX. BROWN INC.
By: /s/ Daniel B. Graves
------------------------------
Name: Daniel B. Graves
Title: Managing Director
By: /s/ Elizabeth A. Chang
------------------------------
Name: Elizabeth A. Chang
Title: Vice President
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SCHEDULE 1
Initial Purchaser Principal Amount of Notes
----------------- -------------------------
Deutsche Banc Alex. Brown Inc. $ 60,000,000
J.P. Morgan Securities Inc. 37,500,000
Bear, Stearns & Co. Inc. 22,500,000
BNY Capital Markets, Inc. 7,500,000
Credit Suisse First Boston Corporation 7,500,000
Fleet Securities, Inc. 7,500,000
Jefferies & Company, Inc. 7,500,000
------------
Total $150,000,000
28
SCHEDULE 2
Company Subsidiaries
- --------------------
Name Jurisdiction of
---- Incorporation/Formation
-----------------------
ATEP Radio, Inc. California
Bison Media, Inc. Colorado
Caron Broadcasting, Inc. Ohio
Common Ground Broadcasting, Inc. Oregon
Golden Gate Broadcasting Company Inc. California
Inland Radio, Inc. California
Inspiration Media, Inc. Washington
Inspiration Media of Pennsylvania, LP Delaware
Inspiration Media of Texas, LLC Texas
Kingdom Direct, Inc. California
New England Continental Media, Inc. Massachusetts
New Inspiration Broadcasting Company, Inc. California
Oasis Radio, Inc. California
Pennsylvania Media Associates, Inc. Pennsylvania
Radio 1210, Inc. California
Reach Satellite Network, Inc. Tennessee
Salem Media Corporation New York
Salem Media of Colorado, Inc. Colorado
Salem Media of Georgia, Inc. Delaware
Salem Media of Hawaii, Inc. Delaware
Salem Media of Illinois, LLC Delaware
Salem Media of Kentucky, Inc. Kentucky
Salem Media of New York, LLC Delaware
Salem Media of Ohio, Inc. Ohio
Salem Media of Oregon, Inc. Oregon
Salem Media of Pennsylvania, Inc. Pennsylvania
Salem Media of Texas, Inc. Texas
Salem Media of Virginia, Inc. Virginia
Salem Music Network, Inc. Texas
Salem Radio Network Incorporated Delaware
Salem Radio Operations, LLC Delaware
Salem Radio Operations - Pennsylvania, Inc. Delaware
Salem Radio Properties, Inc. Delaware
Salem Radio Representatives, Inc. Texas
South Texas Broadcasting, Inc. Texas
SRN News Network, Inc. Texas
Vista Broadcasting, Inc. California
29
Parent Subsidiaries
- -------------------
Name Jurisdiction of
---- Incorporation/Formation
-----------------------
CCM Communications, Inc. Tennessee
OnePlace, LLC Delaware
Salem Communications Acquisition Corporation Delaware
Salem Communications Holding Corporation Delaware
SCA License Corporation Delaware